Third-Quarter Earnings Vary Widely

By Andy Meek

Third-quarter earnings season is wrapping up, and the results have been all over the map for banks and financial institutions with ties to Memphis.

One common thread: many are still making money – an increase in profits, in fact. But the low interest rate environment is eating into how much some of them are able to achieve.

Trustmark Corp., one of the standouts, in recent days announced a third-quarter profit of $29.9 million, up almost 10 percent from the third quarter of 2011. Trustmark president and CEO Gerard Host said the bank’s success is coming from the fact it’s building on expanding customer relationships, especially in its mortgage banking and insurance businesses.

“Trustmark achieved another solid quarter of financial performance despite sluggish economic conditions and the prolonged low interest rate environment,” Host said. “We continued to experience meaningful improvement in credit quality as reflected by significantly lower levels of classified and criticized loans as well as a 30.9 percent reduction in net charge-offs.”

Contrast that with the results from Regions Financial Corp., which posted a big jump in its third-quarter earnings – a $301 million profit, almost three times more than it earned during the same quarter in 2011. However, the Birmingham, Ala.-based bank’s results showed historically low interest rates eating into income from loans and deposits.

Same for Atlanta-based SunTrust Banks Inc., which reported a gain in third-quarter earnings but a decline in net interest margin, which is the difference between the interest a bank collects on loans and interest it pays to depositors.

Meanwhile, Iberiabank reported a third quarter profit of $21 million, up 71 percent from the second quarter. President and CEO Daryl Byrd said the company grew its client base through loans and deposits, has a stable margin and is seeing growth in its mortgage and title insurance businesses.

“For the first time in a long time, the company reported a meaningful reduction in its efficiency ratio inside its (third quarter) results,” wrote bank analyst Kevin Reynolds in a recent analyst note. He was referring to the industry metric that essentially divides total expenses by total revenue.

Bank of Bartlett in the third quarter reported its fifth straight quarterly profit via an increase in net income. For the quarter that ended Sept. 30, Bank of Bartlett reported a net income of almost $9 million. It saw continued increase in consumer loans and new checking accounts.

“Our continued earnings are a result of the bank’s strategic plan to increase our profit centers while reducing expenses and controlling costs,” said Bank of Bartlett president Harold Byrd. “In accordance with that plan, we produced strong financial results from our traditional banking business and expanded growth and profitability in our mortgage banking business.”